Online video is rapidly becoming about much more than viral clips and snippets …

Cloud services have been heralded as a way to give smaller voices the same access to a global audience as bigger voices. Anyone can start a blog that everyone in the world can read. Anyone can post a video to YouTube and generate millions of views in a matter of days. This same power is helping small film distributers that specialize in independent and foreign-language films reach wider audiences by way of streaming, on-demand video. We spoke with one such distributor, Music Box Films, about the recent deal it struck with Netflix to make its movies available via the Watch Instantly streaming service.

Music Box history

The Music Box Theatre is a mainstay of Chicago cinema. Originally built in 1929, the theatre became an "art house" in 1983. Bill Schopf bought the theatre in 1986 and has worked hard to maintain a reputation for bringing the best of foreign and independent film to its audience.

Schopf knew he had a good thing going with the Music Box, one of only a few dozen art house cinemas in the country. To increase the job security of his loyal staff and the theatre's business, he knew he had to expand either horizontally or vertically. While the company is still considering expanding to additional locations in Chicago and elsewhere, an opportunity to branch out into film distribution opened in late 2006.

In 2007, Music Box Films acquired the rights to its first film, Tuya's Marriage. The Chinese language film had earned a Golden Bear award at the Berlin International Film Festival, and later earned two Silver Hugo Awards at the 2007 Chicago International Film Festival. Yu Nan was named Best Actress for her "delicate, natural performance as a woman in crisis which is the soul of the film." The film also garnered a Special Jury Prize for its ts "strong portrait of a woman struggling to survive a remote landscape."

The success with Tuya's Marriage led Music Box to strike a deal with MPI Media Group to distribute its films on DVD for the home video market. Then, in 2008, it struck gold by acquiring the rights to the 2007 French thriller Tell No One. The film won numerous film festival awards and became the top grossing foreign language film in the US for 2008. The film was also considered one of the top ten films of 2008 by several critics, including Roger Ebert of At The Movies fame and Stephen Holden of The New York Times.

MPI worked out the deal to distribute Tell No One on Netflix via DVD and its Watch Instantly streaming service. Music Box Films began acquiring distribution rights to more films, and later decided to develop its own in-house home entertainment division to handle DVD and Blu-ray production and distribution. Netflix then approached Music Box to strike a deal for Watch Instantly. That deal was finalized earlier this year, along with deals with Gravitas Ventures, Kino Lorber, Oscilloscope Laboratories, Regent Releasing, and the highly respected Criterion Collection. All told, the deals with those distributors added about 300 independent and foreign language films to the already impressive streaming service.

The deal means a lot to a small distributor like Music Box Films. "Our core business is releasing films for theatrical release," Schopf told Ars. The theaters that typically show independent or foreign language films, or "art house" cinemas, are few and far between. Most also tend to be located in larger urban areas, such as New York, Los Angeles, and of course, Chicago.

The Girl with the Dragon Tattoo was released by Music Box Films in US theatres two weeks ago. Based on the best-selling book by late author Stieg Larsson, the film—which features a "tattooed and troubled but resourceful computer hacker"—is the highest grossing Swedish film of all time, and the highest grossing film in Europe in 2009.

"With video on demand, however, we get to reach more of our potential audience out there, that may not live anywhere near an art house theatre, or simply may not care to go to a theatre," Schopf said.

Movies in the cloud

There are several reasons Music Box wanted to include video on demand options. Reaching viewers that don't live near an art house is just one of them, though. "The traditional art house audience is over 40," Schopf told Ars. "We don't know for sure, but we have an idea that people in their 20s and 30s watch more films in their homes, so we want to make our films available for them there—we want to make sure we're reaching a younger audience as well."

Also, said Schopf, the more people that see the films, the greater chance Music Box has to generate revenue from DVD sales. "We don't have millions of dollars to market the way Hollywood does," he told Ars. "So video on demand can feed word of mouth, and we like to take advantage of that because it's a very powerful marketing tool."

As visceral an experience as it is to go to a small art house theatre and watch a nice 35mm print, Schopf told Ars that he doesn't much care about the format that people see the film in—35mm, DVD, streaming video—as long as they actually see it. "I've heard that as little as five percent of the films made in the world get distributed in the US," he said.

Traditional film distribution is expensive, especially in a country as large as the US. "One of out biggest costs is making and shipping 35mm prints," Schopf explained. The UK, in contrast, has almost all of its art houses in London—"that's the equivalent of only releasing in New York," he said.

"The big picture of it is this: we find the best films around the world to bring to the US," Schopf told Ars. "We're just a middleman between the films and the people that see them. So we want to get them to as many people as possible and figure out how to bring down the transactional costs to doing so."